TaxTMI 
TaxTMI 
2006 (12) TMI 511
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....ee is indisputably required to carry out the manufacture or sale of country liquor in terms of the provisions of the Act, rules framed thereunder as also the terms and conditions of the licence. 'Alcohol' has been defined in Rule 2(b) of the Kerela Rectified Spirit Rules, 1972 in the following terms : "Alcohol" means ethyl alcohol of any strength and purity having the chemical composition C2 H2 OH." "Country Liquor" has been defined in Section 3(12) of the Act to mean 'toddy or arrack'. 'Toddy' has been defined in section 3(8) of the Act to mean : "Toddy" means fermented or unfermented juice drawn from coconut, palmyra, date, or any other kind of palm tree." 4. Rules were framed by the State of Kerala in exercise of its rule making power conferred upon it under Section 5 of the Act, pursuant whereto or in furtherance whereof 'Kerala Abkari Shops (Disposal in Auction) Rules, 2002 were framed. Rule 9(2) of the said Rules reads as under : "No toddy other than that drawn from the Coconut Plamyrah or Choondapana palms shall be sold by the licensees. All toddy kept or offered for sale should be of good quality and unadulterated. Nothing shall be a....
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....n is destroyed by its own bye-product and no further alcohol formation is possible." 7. Paragraphs 4, 5 and 6 of Chapter X contained in volume II of the Manual read as under : "4. The toddy yield from each kind of tree and the alcoholic strength of toddy varies according to the season of the year, the time during which it is drawn and other attendant circumstances. The daily average yield for Excise Departmental purposes may be taken as 1 = litres per coconut tree, 4 = litres per palmyrah tree and 6 > litres per sago tree. 5. Alcoholic fermentation of toddy which is self generated by the action of wild yeasts starts in the collecting pot itself and this continues for a limited period say a maximum period of 3 days. Subsequent to this, bacterial (acetic) fermentation starts, bringing down the alcohol content. The bacteria and pseudo yeasts are responsible for the rather strong smell of toddy and the acidity developed. If toddy is left over a period of time, (without even any other foreign matter being added to it), alcohol content comes down and acetic acid is formed and this is how vinegar (Acetic acid) is manufactured in many of the parts of Kerala. At the peak point of ferme....
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....entage of ethyl alcohol found to be more, it would not amount to addition of a foreign ingredient as envisaged under Section 57(a) of the Act. It was, therefore, held : "In the result, the challenge against the vires of Rule 9(2) of the Abkari Shops (Disposal in Auction) Rules, 2002 is repelled. Prosecution proceedings against the Respondents under Section 56(b) of the Abkari Act are not liable to be declared illegal. Proceedings to prosecute the Respondents under Section 57(a) of the Act are quashed." 13. The Division Bench of the High Court in subsequent cases followed its earlier orders. 14. Both the licensees as also the State of Kerala are before us. 15. Mr. K.N. Bhat, the learned Senior Counsel appearing on behalf of the State, would submit that the provisions of Section 57(a), in view of its purport and object must receive a purposive construction as even in a case of fermentation; once the percentage of ethyl alcohol is found to be in excess of the permissible limit, the same would amount to addition of foreign material so as to attract the provision of Section 57(a) of the Act. Strong reliance, in this behalf, has been placed on S. Sundaram Pillai and Others etc. v. V....
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....t only directs that all toddy kept or offered for sale should be of good quality and unadulterated but also provides that nothing shall be added to it to increase its intoxicating power or for any other purpose. If the second part prescribing the contents of the ethyl alcohol in toddy is read in the context of the first part vis-`-vis Section 57(a) of the Act, it would be evident that prohibition is aimed at adulteration by addition of any foreign substance to increase its intoxicating power or for any other purpose. 21. Validity of Rule 9(2), therefore, can be saved if the said provision is read in its entirety and rule of harmonious construction is resorted to. If, however, Rule 9(2) is sought to be invoked even for the purpose of initiating a prosecution as against a licensee even he does not add any foreign substance to it, the same, in our opinion, would render the same ultra vires, as would appear from the discussions made hereinafter. 22. It is not in dispute that there does not exist any mechanical devise to measure the contents of ethyl alcohol present in toddy. It also stands admitted that contents of ethyl alcohol in toddy would depend upon various factors including we....
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....erala Samsthana Chethu Thozhilali Union v. State of Kerala and Others ((2006) 4 SCC 327), this Court while interpreting the provisions of the same Act, opined : "The Rules in terms of sub-section (1) of Section 29 of the Act, thus, could be framed only for the purpose of carrying out the provisions of the Act. Both the power to frame rules and the power to impose terms and conditions are, therefore, subject to the provisions of the Act. They must conform to the legislative policy. They must not be contrary to the other provisions of the Act. They must not be framed in contravention of the constitutional or statutory scheme." 30. It was furthermore held : "Furthermore, the terms and conditions which can be imposed by the State for the purpose of parting with its right of exclusive privilege more or less have been exhaustively dealt with in the illustrations in sub-section (2) of Section 29 of the Act. There cannot be any doubt whatsoever that the general power to make rules is contained in sub-section (1) of Section 29. The provisions contained in sub-section (2) are illustrative in nature. But, the factors enumerated in sub-section (2) of Section 29 are indicative of the heads....
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.... by himself or by his employees. He must know where he stands. He must know to what extent or under what circumstances he is entitled to sell liquor. The statute in that sense must be definite and not vague. Where a statute is vague, the same is liable to be struck down. (Hamdard Dawakhana (Wakf) Lal Kuan, Delhi and Another v. Union of India and Others AIR 1960 SC 554). 34. The learned Single Judge although did not deal with the matter in details, but was of the opinion that the statute is not workable. 35. Workability of a statute vis-`-vis the question as to whether it is vague or otherwise must also be considered having regard to the question as to whether it is at all practical. 36. must state that where two interpretations are possible, having regard to the workability or unworkability of a statute, the one which leads to the workability of the statute must be preferred than the other, keeping in view the principle 'ut rest magis valeat quam pereat'. (See State of Tamil Nadu v. M.K. Kandaswami and Others (1975 (4) SCC 745). 37. We may, however, notice some precedents operating in the field : 38. In M.K. Kandawami (supra), this Court observed : "It may be remembe....
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....fter, valid in law. 43. We are concerned herein with construction of a penal statute. 44. Is it possible for a licensee to apply for renewal of his licnece in terms of Section 57 of the Act is the core question. 45. Toddy ferments automatically after sun rise. If it is permitted to be sold within a timeframe after toddy is tapped, reasonableness can be inferred; but at what point of time precisely ethyl alcohol content would exceed 8.1% in a toddy is not known. It will bear repetition to state that the same would depend upon several factors including the climate. It is reasonable to expect that the State would frame rules in consonance with equity and good conscience. A rule may not be worked out if it imposes a condition which, unless some other guidelines are issued, would become impossible to be performed. We must remind ourselves that the consequences of a single violation may be disastrous. If the contention of the State is correct, it would not only result in penal consequences, but would also lead to non-renewal of the licence. The licensee, thus, for all intent and purport looses his right to carry on business. Carrying on trade of liquor may not be a fundamental right, ....
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....es not have to mix anything for increase of contents of ethyl alcohol. It is not the case of the State that the licensee has deliberately mixed additional ethyl alcohol in the liquor so as to increase the potency thereof. 53. Section 57 provides for graver offence. If one act attracts two offences, the one providing for higher punishment cannot be presumed to apply unless ingredients thereof are satisfied. 54. A penal statute must receive strict construction. Only in exceptional cases the principles of purposive construction shall apply to a penal statute. (See Indian Handicrafts Emporium and Others v. Union of India and Others ((2003) 7 SCC 589) and Balram Kumawat v. Union of India and Others (2003) 7 SCC 628). 55. In this case we are satisfied that the High Court was correct in its view that the ingredients of Section 57 of the Act are not attracted in the instant case. 56. In Pratap Singh v. State of Jharkahnd and Another ((2005) 3 SCC 551), this Court opined : "Interpretation of a statute depends upon the text and context thereof and having regard and object with which the same was made." 57. In Mathai v. State of Kerala ((2005) 3 SCC 260), distinguishing between a charg....
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....ute, where such doubt or ambiguity would clearly not be found or made in the same language in any other instrument'." In Lalita Jalan v. Bombay Gas Co. Ltd. this question was examined in considerable detail and it was held that the principle that a statute enacting an offence or imposing a penalty is to be strictly construed is not of universal application which must necessarily be observed in every case. The Court after referring to Murlidhar Meghraj Loya v. State of Maharashtra, Kisan Trimbak Kothula v. State of Maharashtra, Supdt. and Remembrancer of Legal Affairs to Govt. of W.B. v. Abani Maity and State of Maharashtra v. Natwarlal Damodardas Soni held that the penal provisions should be construed in a manner which will suppress the mischief and advance the object which the legislature had in view." 59. We are, however, dealing with a different situation. Section 57 must also receive strict construction, having regard to the fact that thereby an offence proved would lead to a higher penalty; although on the self-same fact another penal provision involving a minor punishment, viz., Section 56 would be attracted. It has to be read having regard to the constitutional protec....